9/10. The Federal Communications
Commission (FCC) announced, but did not release, a Second Report and Order
and Second Further Notice of Proposed Rulemaking
pertaining to digital plug and play cable compatibility. The order is
based upon the December 19, 2002 Memorandum of Understanding negotiated by
consumer electronics and cable companies.

FCC Chairman
Michael Powell (at right)
wrote in a separate
statement [PDF]
that "Consumers who want digital television sets will have an easier
time connecting them to their cable service and having them work with high
definition and other digital programming. I am more convinced than ever that
high definition programming is becoming a competitive differentiator among
television programmers."

Background. On December 19, 2002, fourteen consumer electronics
companies and seven cable operators announced that they entered into a
Memorandum of Understanding (MOU) regarding a national plug and play standard
between digital television (DTV) products and digital cable systems. See,
document [78
pages in PDF] consisting of the MOU, proposed rules to be promulgated by the
FCC, and a letter to FCC Chairman Powell. See also, story titled "Cable and
Consumer Electronics Companies Announce DTV Agreement" in
TLJ Daily E-Mail
Alert No. 572, December 20, 2002.

This proposal required implementation by the FCC. On January 7, 2003, the FCC
announced a Further Notice of Proposed Rulemaking
(FNPRM) seeking comment on the rules proposed by the MOU. See, story titled "FCC
Seeks Comments on Cable TV Plug and Play MOU" in
TLJ Daily E-Mail
Alert No. 581, January 13, 2003. See also,
notice in the Federal Register, January 16, 2003, Vol. 68, No. 11, at Pages
2278 - 2283.

See also, story titled "Comment Period Closes in FCC's Plug and Play Cable
Compatibility Rulemaking Proceeding" in
TLJ Daily E-Mail
Alert No. 655, May 5, 2003.

On July 23, 2003, Rep. Lee Terry (R-NE),
Rep. Rick Boucher (D-VA) and others
introduced HR
2825, the "Consumer Access to Digital Television Enhancement Act". The bill
states that "Within 30 days after the date of enactment of this Act, the Federal
Communications Commission shall, by regulation, adopt and implement the
regulations proposed in the memorandum of understanding between the cable and
consumer electronics industries filed with the Commission on December 19, 2002,
as contained in the Commission's notice of proposed rulemaking concerning
compatibility between cable systems and consumer electronics equipment (FCC
03-3; adopted January 7, 2003)."

Report and Order. The FCC's release describing the yet to be released
report and order states
that "The new rules will permit TV sets to be built with ``plug and play´´
functionality for one-way digital cable services, which include typical cable
programming services and premium channels like HBO and Showtime. Consumers will
have to obtain a security card (often called a ``POD´´ or ``cable card´´), from
their local cable operator, to be inserted into the TV set."

It also states that "Consumers will still need a set-top box to receive
two-way services such as video on demand, impulse pay-per-view and cable
operator-enhanced electronic programming guides."

The FCC release also describes "limits on copy control mechanisms". It
asserts that the FCC has "ancillary jurisdiction" authority to issue
such rules.

Specifically, it states that "The current use of selectable output
controls by all multichannel video programming distributors (MVPDs) is
prohibited" and that down resolution by MVPDs for broadcast programming is
prohibited.

It also states that "The encoding rules, which are applicable to
all MVPDs, are modeled generally upon the Digital Millennium Copyright Act:
(i) Copy never: pay-per-view, video-on-demand
(ii) Copy once: basic and extended basic cable service
(iii) No restrictions on copying: broadcast television statements."

However, the FCC release adds that these rules do not extend "to
distribution of any content over the Internet or an MVPD's services offered via
cable modem or DSL. The Order includes a petition process for new services or
business models that may be developed in the future. This process would involve
case-by-case determinations of whether specific encoding rules are in the public
interest."

Reaction. Rep. Boucher stated that "Consumers will now be able to buy
DTVs which connect directly to digital cable without a set-top box, and enjoy
convenient access to HDTV offered by cable providers." He added that "The FCC's
expeditious action moves us a step closer in the transition to digital
television".

Rep. Billy Tauzin (R-LA), the
Chairman of the House Commerce
Committee, released a
statement in which he praised the adoption of plug and play rules. He also
wrote that "The new rules will prevent piracy of digital content from being carried over
cable and satellite systems, while preserving consumers’ ability to make use of
that content legally. Without these very necessary protections, content
providers would be hesitant to make high-value digital content available and
many consumers would not be inclined to make the switch to digital television."

The Consumer Electronics Association praised
the FCC's action. It stated in a
release
that "The plug-and-play agreement not only ensures consumers will be able to buy
DTVs that connect to digital cable without a set-top box, but also establishes a
long sought after balance between consumer home recording rights and copyright
protection through reasonable encoding rules or "rules of the road" for digital
content. These rules, which are based on existing law and agreements with
content studios, are applicable to all multichannel video programming
distributors (MPVDs), including cable."

Edward Fritts, President of the National
Association of Broadcasters (NAB), stated in a
release
that "The FCC deserves enormous credit for adopting today's 'plug and play'
decision, and particularly for insisting that digital TV tuners with
over-the-air reception capability be included in digital 'cable ready'
television receivers. Step by step, the Commission is resolving roadblocks that
have delayed the transition from analog to digital television. The time is ripe
for the FCC to complete the loop by adopting cable carriage rules ensuring
consumer access to the 1,000 digital broadcast stations on the air and serving
their communities."

9/10. The Federal Communications
Commission (FCC) announced new rules pertaining to digital plug and play
cable compatibility, without also addressing another issued related to DTV
conversion, the broadcast flag. The FCC's release
announcing its plug and play rules also states, without elaboration, that
the FCC "will address Digital Broadcast Copy Protection issues in the near
future."

Background. Programming that is in digital format is more
susceptible to copying and copyright infringement than analog programming,
because it is easier to make and distribute exact copies of digital content.
Thus, content providers have a disincentive to make their works available in
digital format. To the extent that less content is made available in digital
format, consumers have less incentive to purchase DTV receivers and equipment.
The FCC, which seeks a conversion to DTV, has therefore involved itself in copy
protection issues.

Title 17 of the U.S. Code, which codifies the Copyright Act,
gives rule making authority for implementing the Copyright Act to the Library of
Congress, not the FCC. Moreover, there is no specific grant of authority to the
FCC in Title 47 of the U.S. Code, the Communications Act, to promulgate
copyright protection regulations.

Nevertheless, on August 8, 2002, the FCC adopted a
Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding
titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposed
that the FCC promulgate a broadcast flag rule, and seeks comment on this, and
related questions. This is MB Docket No. 02-230. The public comment period ended
last year. See, stories titled "FCC Issues NPRM on Broadcast Flag" and "FCC
Debates Its Authority to Promulgate Broadcast Flag Rule" in
TLJ Daily E-Mail
Alert No. 489, August 12, 2002. See also,
FCC
release [PDF].

The FCC has yet to issue an order containing rules in this proceeding.

September 10 Statements. FCC Chairman
Michael Powell
wrote in a separate
statement [PDF]
in the plug and play proceeding that "I plan to deliver to my colleagues a draft
decision on the Broadcast Flag proceeding in the very near future. All affected
parties should be aware that this proceeding is in the on-deck circle."

Powell also stated that "Now that we have taken this step in the
cable world, we must immediately turn our attention to broadcasting. Over 35
million Americans continue to receive television programming exclusively from
over-the-air broadcasters. And over 30% of all television sets in this country
are not connected to cable or satellite service. The viability of our free
broadcasting system is a high priority for me, and the government needs to
ensure that broadcast television is not disadvantaged as a delivery platform for
high value content."

FCC Commissioner
Kevin Martin (at right) wrote in a separate
statement
[PDF] in the plug and play proceeding that "I am disappointed that we were not able to
resolve the Broadcast Flag proceeding at the same time. Acting on the content
protection rules in both the Plug & Play proceeding and the Broadcast Flag
proceeding at the same time would have clarified the rules of the road for all
participants in the DTV transition. Still, I am pleased that the Commission has
committed in this item to resolving the Broadcast Flag proceeding in the near
future, and I look forward to working with my colleagues on this difficult and
important issue."

FCC Commissioner Michael Copps
wrote in a separate
statement
[PDF] in the plug and play proceeding that "I vote for today's Order with the
understanding that it will not affect any of the rights or remedies available
under our nation's copyright laws and cognizant that it is Congress that
ultimately sets national policy in this critical and sensitive area. As we
implement this decision, I for one, and I trust my colleagues, will remain
sensitive to this and not venture into content matters beyond our authority."

FCC Commissioner
Jonathan Adelstein wrote
in a separate statement [PDF] in the plug and play proceeding that "We are
mindful today of the needs of copyright owners to protect high value content.
Our action does not affect any rights or limitations of copyright holders under
the copyright law. We preserve flexibility for the later use of certain methods
of protecting premium content if it is shown that such uses are necessary and
consumer-friendly."

Rep. Billy Tauzin
(R-LA), the Chairman of the House
Commerce Committee, commented that "The FCC also announced its commitment to
move a broadcast flag item in the near future. This is a very important issue to
the many consumers who still rely on free, over-the-air broadcasting. Without
similar protections for broadcast networks, these consumers would be left out of
the new digital era."

In the House of Representatives, the
House Judiciary Committee has
jurisdiction over intellectual property matters, including copyright.
Nevertheless, the House Commerce Committee has been increasingly active on
intellectual property issues in recent years.

FCC Announces NPRM To Review TELRIC Rules

9/10. The Federal Communications
Commission (FCC) announced, but did not release, a notice of proposed
rulemaking (NPRM) regarding the pricing of unbundled network elements (UNEs)
and the resale of services by incumbent local exchange carriers (ILECs). The
current rules were written in 1996.

The FCC issued a short
press release [PDF] describing the NPRM. It states that the "current
UNE pricing rules, based
on the Total Element Long Run Incremental Cost (TELRIC), consider what it would
cost the new entrant -- today -- to build and operate a hypothetical, efficient
telephone network that can provide the same services as the incumbent local
exchange carrier’s (LEC) existing network."

It states that the NPRM "tentatively concludes that
our TELRIC rules should more closely account for the real-world attributes of
the routing and topography of the incumbent's network in developing
forward-looking costs".

The FCC's release also states that the FCC "seeks
comment on numerous network assumptions, such as network routing and
construction, technology, structure sharing, and fill factors, in light of the
tentative conclusion."

The FCC also seeks comment "on the impact of changes in unbundling
obligations resulting from the Triennial Review Order on UNE pricing" and "on
what resale pricing rules the FCC should adopt in light of the U.S. Court of
Appeals for the Eight Circuit decision to vacate the FCC's previous resale
pricing rules."

FCC Chairman
Michael Powell
wrote in a separate
statement [PDF] that "our commitment to retaining
a forward-looking approach is unwavering -- what we are debating is the extent
to which realistic assumptions about the incumbent's network should be included
in our pricing rules." He added that "an approach grounded in the real-world
attributes of the incumbent's network would address claims that our TELRIC rules
currently distort a competitor’s decision whether to invest in new facilities or
to lease an incumbent’s existing facilities."

FCC Commissioner
Kathleen Abernathy wrote
in a separate
statement [PDF]
that this NPRM "recognizes two key problems with the TELRIC pricing standard.
First, it is a black box that permits inconsistent results among the states for
reasons unrelated to actual cost differentials, and it also permits internal
inconsistencies within individual rate proceedings. Second, the excessively
hypothetical nature of the Commission’s existing standard sends inappropriate
investment signals and produces irrational pricing in some instances."

FCC Commissioner Kevin
Martin wrote in a separate
statement [PDF]
that "Today's item, in conjunction with our decision in the recent Triennial
Review Order, begins the process to provide the necessary adjustments to the
TELRIC formula that will more accurately reflect incumbent costs and help spur
deployment in new facilities and services."

FCC Commissioner
Jonathan Adelstein wrote
in a separate
statement [PDF]
that he supports this item, but would have preferred that it not include any
tentative conclusions.

FCC Commissioner
Michael Copps (at right) dissented in
part. He wrote in a separate
statement [PDF]
that "I just don’t believe the record at hand justifies the making of important,
even if tentative, conclusions. Such tentative conclusions often have a curious
way of becoming final. On the basis of little or no prior record, the majority
today adopts a tentative conclusion concerning so-called real-world network
attributes that I believe is confusing and inconsistent with basic premises of
TELRIC that were upheld as a reasonable interpretation of Section 252(d)(1) by
the Supreme Court. For a Commission striving to provide clarity to an industry,
this is a strange way to do it."

ILEC Reaction. Walter McCormick, P/CEO of the
U.S. Telecom Association (USTA), a group that
represents ILECs, stated in a
release that "the
FCC's notice is a step in the right direction. On the positive side, it might
move telecom policy in the direction of the real world and economic rationality.
But on the negative side, it perpetuates this mindset that it’s okay to place
local phone companies and their customers in a different category than all other
communications platforms. It continues to insist that in today’s crowded
communications marketplace, government can better manage competition than
consumers."

Susanne Guyer, SVP for Federal Regulatory Affairs at
Verizon, an ILEC, stated
in a release that "Making sure that wholesale rates reflect real-world costs is
long overdue. Making sure that carriers that lease parts of our network pay fair
wholesale prices will help restore health to a sick sector of the economy.
Making sure that everyone who uses our network pays their fair share will ensure
all customers continue to get high-quality service at a great price. Appropriate
pricing also will help restore incentives for all providers to invest in telecom
networks, which will lead to more jobs in our communities."

This is FCC Docket No. WC 03-173. The proceeding is titled
"Review of the Commission Rules Regarding the Pricing of Unbundled Network
Elements and the Resale of Services by Incumbent Local Exchange Carriers".

State Department Official Addresses
International Cyber Security

9/8. Lincoln Bloomfield,
Assistant Secretary of State for Political Military Affairs, gave a
speech at the Southeastern European Cybersecurity Conference in Sofia,
Bulgaria. He stated that "We need all states to take tangible steps to
reduce the risks to critical
information infrastructures around the world."

Bloomfield (at right) said that "At the same time as we are increasing
our reliance on information technology
for critical services, we are seriously concerned that the reliability and
availability of these systems is threatened on a daily basis. Every day brings
another story of a system vulnerability being criminally exploited, resulting in
downtime and economic losses. If these vulnerabilities were to be exploited
systematically by hostile individuals or terrorist groups, our national security
could be threatened."

He added that "The United States has concluded that, no matter what steps
individual states
might take to safeguard their own critical information infrastructures, none of
us will be secure until the least secure among us has addressed the issue. This
technology gives us a shared opportunity, but also a shared vulnerability and a
shared responsibility."

He offered several observations about cyber threats. He stated that "the
tools to conduct cyber attacks are widely available to any person or group,
regardless of their motivation". He said that "cyber attacks pay no
attention to national boundaries. In fact,
perpetrators are likely to route attacks through several countries to decrease
the probability of being caught. That is why our cybersecurity depends on the
security practices of every country, every business, and every citizen ..." He
also stated that "most of the information infrastructures that we rely upon,
even for many government functions, are in the private sector", so, there must
be "a broad partnership between government and industry in all of our
countries."

He also offers several recommendations for countries. For example, he stated
that "each country should review its legal code to assure that it effectively
criminalizes misuse of information technology and that it has in place the
domestic tools to investigate and prosecute cyber crime, and rules to facilitate
trans-border law enforcement."

LOCATION CHANGE. 9:30 AM. The
House Commerce
Committee's Subcommittee on Telecommunications and the Internet will hold
a hearing on
HR 2898, the "E-911 Implementation Act of 2003". See,
notice. The event will be webcast. The witnesses will be
Tim Berry (Indiana State Treasurer),
John Muleta
(Bureau Chief of the FCC's
Wireless Telecommunications Bureau), Anthony Haynes
(Tennessee Emergency Communications Board), and Terry Addington
(P/CEO of First Cellular of Southern Illinois). Location: Room 2123, Rayburn Building.

Deadline for claimants to royalty fees collected for calendar year 2001
under the cable statutory license to submit comments and notices of intention
to participate to the Copyright Office
regarding whether a Phase I or Phase II controversy exists as to the
distribution of those fees. See,
notice in the Federal Register, August 13, 2003, Vol. 68, No. 156, at
Pages 48415 - 48417.

The U.S. Patent and Trademark Office's
(USPTO) final rule amending its rules to separate the provisions for patent
matters and trademark matters with respect to filing correspondence,
requesting copies of documents, payment of fees, and general information takes
effect. The USPTO is "amending its Rules of Practice in Patent Cases to delete
all references to trademark matters, and amending its Rules of Practice in
Trademark Cases to add new rules setting forth provisions for corresponding
with and paying fees to the Office in trademark cases, and for requesting
copies of trademark documents." See,
notice in the Federal Register, August 13, 2003, Vol. 68, No. 156, at
Pages 48286 - 48293.

Deadline to submit comments to the
LOCAL Television Loan Guarantee Board regarding the proposed regulation to
implement the LOCAL Television Loan Guarantee Program, as authorized by the
Launching Our Communities' Access to Local (LOCAL) Television Act of 2000. The
purpose of the Act is to facilitate access to signals of local TV stations in nonserved
areas and underserved areas. The Act establishes a LOCAL Television Loan
Guarantee Board to approve guarantees of up to 80% of loans totaling no more
than $1.25 Billion. The regulation proposes to establish eligibility and
guarantee requirements, the application and approval process, the
administration of guarantees, and the process through which the Board will
consider applications under the priority considerations required in the Act. See,
notice in the Federal Register, August 15, 2003, Vol. 68, No. 158, at Pages
48814 - 48833. See also, Treasury
release.

Tuesday, September 16

8:30 AM - 5:00 PM. The National Institute
of Standards and Technology's (NIST) Information Security and Privacy
Advisory Board will meet. This is the first day of a three day series of
meetings. The agenda includes (1) a session on agencies customer service
management work, (2) a session on the National Information Assurance Program
extension activities, (3) a session on acceptable behavior of "Touching the
Browser", (4) NIST information technology laboratory briefings, (5) an update
by OMB on privacy and security issues, and (6) a briefing by the Department of
Homeland Security Privacy Officer. See,
notice in the Federal Register, August 27, 2003, Vol. 68, No. 166, at
Pages 51559 - 51560. Location: Bethesda Hyatt Regency Hotel, 7400 Wisconsin
Ave., Bethesda, MD.

9:30 AM. The U.S. Court of Appeals
(DCCir) will hear oral argument in Consumer Electronics Association v.
FCC, No. 02-1312. This is a petition for review of the
Federal
Communications Commission's (FCC) order regarding conversion to digital
television adopted on August 8, 2002, and released on August 9, in MM Docket
No. 00-39. At issue is whether the FCC has authority, under the All Channel
Receiver Act, 47
U.S.C. § 303(s), to require manufacturers to incorporate expensive digital
tuner devices into new TV receivers, even though most TV purchasers not use
these devices. The CEA is represented by the law firm of
Squire Sanders. Judges Ginsburg, Roberts and
Williams will preside. Location: 333 Constitution Ave. NW.

10:00 AM. The Senate
Banking Committee will hold a hearing on the pending nominations of Harvey
Rosen (to be a Member of the Council of Economic Advisors),
Kristin Forbes (Council of Economic Advisors), Julie Myers (Assistant
Secretary, Department of Commerce), and Peter Lichtenbaum (Assistant
Secretary, Department of Commerce). See,
notice. Location: Room 538, Dirksen Building.

8:30 AM - 5:00 PM. The National Institute
of Standards and Technology's (NIST) Information Security and Privacy
Advisory Board will meet. This is the second day of a three day series of
meetings. The agenda includes (1) a session on agencies customer service
management work, (2) a session on the National Information Assurance Program
extension activities, (3) a session on acceptable behavior of "Touching the
Browser", (4) NIST information technology laboratory briefings, (5) an update
by OMB on privacy and security issues, and (6) a briefing by the Department of
Homeland Security Privacy Officer. See,
notice in the Federal Register, August 27, 2003, Vol. 68, No. 166, at
Pages 51559 - 51560. Location: Bethesda Hyatt Regency Hotel, 7400 Wisconsin
Ave., Bethesda, MD.

11:00 AM - 4:00 PM. The Cato Institute
will host a symposium titled "The Supreme Court: Past and Prologue: A Look
at the October 2002 and October 2003 Terms". The fourth panel, at 3:30 PM,
will address the upcoming term. The speakers on that panel will be James
Swanson (Cato), Michael Carvin, Walter Dellinger (O'Melveny & Myers), and
Thomas Goldstein (Goldstein & Howe). The event will be webcast. See,
notice and
registration page. Location: Cato, 1000 Massachusetts Ave., NW.

12:00 NOON - 1:30 PM. The Intellectual Property Law
Section of the D.C. Bar
Association and the ABA will host a luncheon titled "The Clash Between
the Right of Publicity and the First Amendment". The price is $10, or
free if you bring your own lunch. Location: Finnegan Henderson, 1300 I Street,
NW.

8:00 AM - 1:45 PM. The U.S. Chamber of
Commerce will host an event titled "Immigration -- Access, Security and
the American Economy". See,
notice. The
price to attend is $95 (members) or $155 (non-members). Location: U.S. Chamber
of Commerce, 1615 H Street, NW.

8:30 AM - 1:00 PM. The National Institute
of Standards and Technology's (NIST) Information Security and Privacy
Advisory Board will meet. This is the third day of a three day series of
meetings. The agenda includes (1) a session on agencies customer service
management work, (2) a session on the National Information Assurance Program
extension activities, (3) a session on acceptable behavior of "Touching the
Browser", (4) NIST information technology laboratory briefings, (5) an update
by OMB on privacy and security issues, and (6) a briefing by the Department of
Homeland Security Privacy Officer. See,
notice in the Federal Register, August 27, 2003, Vol. 68, No. 166, at
Pages 51559 - 51560. Location: Bethesda Hyatt Regency Hotel, 7400 Wisconsin
Ave., Bethesda, MD.

The U.S. Trade Representative's (USTR)
interagency Trade Policy Staff Committee (TPSC) will hold a hearing to assist
it in preparing its annual report to the Congress on the People's Republic of
China's compliance with the commitments that it made in connection with its
accession to the World Trade Organization (WTO).
See,
notice in the Federal Register, July 21, 2003, Vol. 68, No. 139, at Pages
43247 - 43248. Location: Room 1, 1724 F Street, NW.

The CDT alleges that Pennsylvania's "system of
secret prior restraint orders" against internet service providers regarding the
blocking of access to child pormography on the web is unconstitutional under the
Commerce Clause, the First Amendment, and the Fourteenth Amendment. The CDT also
filed a motion for temporary restraining order (TRO). See,
memorandum in
support [18 pages in PDF] of motion for TRO.

On September 9, the Court issued an
order
[2 page PDF scan] in which it ordered that, "Pending final resolution of this
action, the Attorney General of Pennsylvania shall discontinue issuance of
informal notices to internet service providers requiring that they deny their
subscribers access to any website".

9/10. The House passed
HR 2622,
the "Fair and Accurate Credit Transactions Act of 2003", by a vote of
393-30. See,
Roll Call No. 499. See also, House Financial Services Committee
release, with summary of the bill.

9/10. The House
Government Reform Committee's Subcommittee on Technology, Information Policy,
Intergovernmental Relations and the Census held a hearing titled "Worm
and Virus Defense: How Can We Protect the Nation's Computers from These
Serious Threats?"

9/9. The Federal Trade Commission (FTC)
released a report
[40 pages in PDF] titled "Report to Congress Pursuant to the Do Not Call
Implementation Act on Regulatory Coordination in Federal Telemarketing Laws".

9/9. Rep. John Dingell (D-MI) and
Rep. Richard Burr (R-NC) wrote a "dear
colleague"
letter to other members of the House urging support for, and cosponsorship
of, HR 2052,
the "Preservation of Localism, Program Diversity, and Competition in Television
Broadcast Service Act of 2003". The bill was introduced in response to the national
TV ownership provisions of the FCC's June 2, 2003
Report and Order and Notice of Proposed Rulemaking [257 pages in PDF]
amending its media ownership rules. See also, story titled "FCC Announces Revisions
to Media Ownership Rules" in
TLJ Daily E-Mail
Alert No. 672, June 3, 2003. HR 2052 provides that "The Commission shall not
permit any license for a commercial television broadcast station to be granted,
transferred, or assigned to any party (including all parties under common
control) if the grant, transfer, or assignment of such license would result in
such party or any of its stockholders, partners, or members, officers, or
directors, directly or indirectly, owning, operating or controlling, or having a
cognizable interest in television stations which have an aggregate national
audience reach exceeding 35 percent."

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